Don Polye's told parliament a huge portion of the funds will be spent on health, education and infrastructure programs targetting provincial and local level governments and districts.
Treasurer Polye expects the economy to grow by about four per cent, despite a shortfall of more than A$1 billion, while treasury officials are predicting an inflation rate of between eight and nine per cent, with an improvement expected in 2014.
The Director of PNG's Institute of National Affairs, Paul Barker says spending more money in rural areas is a good strategy, but if it's to succeed, then that spending must be monitored closely.
Presenter: Firmin Nanol
Speaker: Paul Barker, Director of PNG's Institute of National Affairs
BARKER: To plan that money, to manage that money and account for that money, and that means building up the capacity of local level governments in the district, but it also means increasing awareness and capacity within the community, ensuring that the mechanisms for you have the national budget, but right down to the local budget that that is publicised at the local level and that the community can ask questions, so that they can undertake what's called social auditing, so you can actually say, OK, there is this money for a school classroom, there's this money for various other facilities at the local level. Now, where is it? So the community can actually say OK, there's meant to be a two class new school facility, OK, let's see the specifications. It isn't meeting specifications or where is this facility? And to make sure that the different agencies are meeting their responsibilities, because as we know, you get some agencies, are going to provide the teachers, some may build the schools, some are going to do the maintenance. We need to be coordinating these sort of different activities.
NANOL: So Paul, what you're saying is that the Finance and the Treasury Department and the Planning office didn't come with the guidelines probably ? They said they want to introduce it, so you think it's like putting the cart before the horse?
BARKER: What would concern me was there doesn't seem to anything as far as I can see so far, for building up the capacity-building at the local level, at the district local level, government level. There seemed to be an indication that this was going to be left to the development partners. Well, hang on, you've got a 13 billion Kina budget for next year. Surely the National Government should be taking a lead responsibility and building up that training and capacity and not just leaving it to development partners. Development partners, very valuable contribution. But, at the end of the day, all the core functions, whether its maintenance, training, supporting local community involvement, social empowerment. This has to be a core responsibility of the National Government of Papua New Guinea, not just left to development partners, however valuable their role maybe. And it's like you have such a major increase in expenditure. Yes, it's recognised that there'll be a decline in the employment generation economic activity coming out of LNG over next year, so the governments to some extent, trying to fill the gap with national infrastructure programs and funding for the local level. But it does have to go much more hand in hand with capacity-building. It probably would have been an idea to have done it on more of a phased approach.
NANOL: I mean it's a 13 billion Kina deficit budget, or over 2.5 billion Kina with four per cent expected growth in the GDP. Do you think that's achievable, attainable in the next year?
BARKER: Well, Treasurer indicated he thought that it was a conservative budget and that the growth figure could be better, but we also know that they were fairly optimistic on the commodity prices, because you've got a dicey global economic situation and with Euro zone debt crisis, still a fairly stagnant growth in the United States, but also a decline in the growth in some of the major Asian economies, like almost recession in India again, Chinese growth back to seven per cent. This is resulting in lower commodity prices and we're dependent on those commodity prices for getting us a level of revenue that are expected from particularly the mining sector and through taxes. So it could be considered to be optimistic and over the next couple of years, particularly before any LNG exports and subsequent revenue, because it must be remembered, it's not really until the late part of this decade that we really see much in the way of revenue from LNG. Yes, it will have an impact on GDP, but much of that will flow back out of the country to be repaying debt and so on. So yes, there's an optimism about the growth of the economy and certainly if, if, we can manage the funds well and improve the infrastructure. It should have an impact on giving opportunities to PNG farmers and others.